Chapter 01 essentials final

Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Chapter 1
What is operations management?

In Chapter 1 - Operations management– Slack et. al.
identify the following key questions…….
What is operations management?
Why is operations management important in all types of
organization?
What is the input-transformation-output process?
What is the process hierarchy?
How do operations processes have different
characteristics?
What are the activities of operations management?
Key operations questions

Operations management is the activity
of managing the resources which are
devoted to the production and delivery of
products and services.
Operations management defined

Customers
Input
resources
Output
products and
services
Transformed
resources
•Materials
•Information
•Customers
Transforming
resources
•Facilities
•Staff
Design
Deliver
Direct
Develop
Operations
Management
Slack et al’s model of operations management

The consultancy services market - % of world
revenues of 40 largest consultancy firms
Marketing/sales
2
Operations and process
management
31
Corporate strategy
17
IT strategy
17
Benefits/Actuarial
16
Organizational
design
11
Financial
6
Operations management is fashionable!

Design a store layout
which gives smooth
and effective flow
Design elegant
products which can be
flat-packed efficiently
Site stores of an
appropriate size in
the most effective
locations
Maintain
cleanliness and
safety of storage
area
Arrange for fast
replenishment of
products
Monitor and enhance
quality of service to
customers
Continually examine
and improve
operations practice
Ensure that the jobs
of all staff encourage
their contribution to
business success
Operations management at..... IKEA

Back office
operation in a bank
Kitchen unit
manufacturing
operation
Retail operation
Take-out / restaurant
operation
They are all operations

The best way to start understanding the nature of
“Operations” is to look around you
Everything you can see around you (except the flesh and
blood) has been produced by an operation
Every service you consumed today (radio station, bus
service, lecture, etc.) has also been produced by an
operation
Operations Managers create everything you buy, sit on,
wear, eat, throw at people, and throw away
Operations are everywhere

Engineering/
technical
function
Accounting
and finance
function
Human
resources
function
Information
technology
(IT) function
Understanding of
the capabilities and
constraints of the
operations process
New product and
service ideas
Understanding of the
capabilities and
constraints of the
operations process
Market
requirements
Financial analysis
for performance
and decisions
Provision
of relevant
data
Recruitment
development
and training
Understanding of human
resource needs
Analysis of new
technology options Understanding of
process technology
needs
Provision of systems for
design, planning and
control, and improvement
Understanding
of infrastructural
and system
needs
Marketing
function
Product/service
development
function
Operations
function
Interfunctional relationships between operations and
other functions

“High-end” sandwich and snack retailer
Use only “wholesome” ingredients
All shops have own kitchens which makes fresh
sandwiches every day
Fresh ingredients delivered early every morning
Same staff who serve you at lunch made the sandwiches
that morning
“We don’t work nights, we wear jeans, we party…”
Prêt a Manger

Nutritional “mechanical”
and aesthetic design of
the sandwiches and
snacks
Design, location
and management
of stores and in-
store processes
and the network
that supplies them
The three basic functions at Prêt a Manger
Product/
Service
Development
OperationsMarketing
Promotional
activities,
market
research, etc.

Automobile assembly factory - Operations
management uses machines to efficiently
assemble products that satisfy current
customer demands
Operations management in all types of organization

Physician (General practitioner)
- Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns

Management consultant - Operations
management uses people to effectively
create the services that will address
current and potential client needs

Disaster relief
charity - Operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering

Advertising agency - Operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs

machines
Operations management uses…………
to efficiently assemble products
effectivelyknowledge
to treat real and
perceived patient
concerns
diagnose
conditions
to
people create services that will
address current and
potential client
needs
effectivelyto
ours and our
partners’
resources
speedily provide supplies and
services that relieve
community suffering
to
our staff’s
knowledge and
experience
creatively ideas that delight
clients and address
their real needs
presentto

The business environment is
changing, for example……
Prompting operations responses, for
example…….
 Increased cost-based competition
 Higher quality expectations
 Demands for better service
 More choice and variety
 Rapidly developing technologies
 Frequent new product/service
introduction
 Increased ethical sensitivity
 Environmental impacts are more
transparent
 More legal regulation
 Greater security awareness
Globalization of operations networking
Information-based technologies
Internet-based integration of operations
activities
Supply chain management
Customer relationship management
Flexible working patterns
Mass customization
Fast time-to-market methods
Lean process design
Environmentally sensitive design
Supplier ‘partnership’ and development
Failure analysis
Business recovery planning
Operations management is changing

All operations are input-transformation-output processes
Inputs OutputsTransformation process

Customers
Transformed
resources
•Materials
•Information
•Customers
Transforming
resources
•Facilities
•Staff
Operations input resources and outputs
Input
resources
Output
products and
services
Transformation process
Outputs are products and services
that add value for customers

Customers
Transformed
resources
Ingredients
Packaging
Customers
Transforming
resources
Equipment
Fittings
Staff
Inputs and outputs at Prêt a Manger
Input
resources
Served and
satisfied
customers

Mixture of products
and services –Outputs
that are a mixture of
the tangible and
intangible
Prèt a manger
Acme whistles
Mwagusi Safari
Lodge
Crude oil production
Aluminium smelting
Specialist machine tool
production
Restaurant
Information systems
provider
Management consultancy
Psychotherapy clinic
Pure products –
Outputs that are
exclusively tangible
Pure services –
Outputs that are
exclusively intangible
IKEA
Most operations produce products and services

Flow between operations
The level of the supply network
The level of the operation
Flow between processes
The level of the process
Flow between resources
Operations can be analyzed at three levels

Operations management is
concerned with the flow of
transformed resources
between operations,
processes, where….
Processes form an internal
“supply network” and
become each others
customers and suppliers
External operations interact
with internal processes to form
the external supply network
Operations can be analyzed at three levels
Flow between operations
Flow between processes
Flow between resources

The supply network - Flow between operations
Broadcasting
company
Promotion
agency
Studios
Casting
agency
Creative
agency
A programme
and video
supply network
Program /
video
maker
The
programme
and video
operation
The operation - Flow between processes
Example of analysis at three levels

Programme
and video
maker
The programme and video operation
Production
unit
Set and props
manufacture
Engineer
-ing
Marketing
and sales
Finance and
accounting
Post
production

Programme
and video
maker
Set and props
manufacture
Set
design Props
acquisition
Set
construction
Set
finishing
The ‘Set and
props
manufacturing
’ process

Programme and
video maker
End-to-end process for programme production
Programme set and
props manufacture
Engineering
Programme
marketing and
sales
Programme
production unit
Programme finance
and accounting
Programme
post
production
End-to-end process for music video production
Music video set
and props
manufacture
Music video
marketing and
sales
Music video
production
unit
Music video
finance and
accounting Music video
post
production
The television and video company divided into two ‘end-
to-end’ business processes,

Any organization
OperationsMarketing
SalesFinance
Human
resources
Information
systems
All functions use processes to provide service

Financial services
An account
management centre at
a large retail bank
Financial analyst
advising a client at an
investment bank
Furniture manufacturing
Mass production of
kitchen units
Craft production of
reproduction
‘antique’ furniture
Hotels
Value-for-money
hotel
Lobby of an
international
luxury hotel
Differences within sectors are often greater than the
differences between sectorn

Variation in demandHigh Low
VisibilityHigh Low
VarietyHigh Low
HighVolumeLow High
A typology of operations and processes
The 4 vs............

High
Implications
•Low repetition
•Each staff
member performs
more of each task
•Less
systemization
•High unit costs
Implications
•High repeatability
•Specialization
•Capital intensive
•Low unit costs
VolumeLow High
The implications of high and low Volume in operations and
processes.......

High
Implications
•Flexible
•Complex
•Match customer
needs
•High unit costs
Implications
•Well defined
•Routine
•Standardized
•Regular
•Low unit costs
VarietyHigh Low
The implications of high and low Variety in operations and
processes.......

High
Implications
•Changing
capacity
•Anticipation
•Flexibility
•In touch with
demand
•High unit costs
Implications
•Stable
•Routine
•Predictable
•High utilization
•Low unit costs
Variation in
demand
High Low
The implications of high and low Variation in operations and
processes.......

High
Implications
•Short waiting
tolerance
•Satisfaction
governed by
customer
perception
•Customer contact
skills needed
•Received variety
is high
•High unit costs
Implications
•Time lag between
production and
consumption
•Standardization
•Low contact skills
•High staff
utilization
•Centralization
•Low unit costs
VisibilityHigh Low
The implications of high and low Visibility in operations and
processes.......

Volume
Important to understand how different operations are
positioned on the 4 V’s.
Is their position where they want to be?
Do they understand the strategic implications?
Variety
Variation
Visibility
Low
High
High
High
High
Low
Low
Low
Mwagusi
Safari Lodge
Formule 1
Hotel
A 4 Vs profile of two operations

Chapter 01 essentials final

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Chapter 01 essentials final